Chief Economic Advisor at Allianz, Mohamed El-Erian, has highlighted inflation as a major challenge for President Joe Biden‘s potential reelection. This comes amid a recent poll showing that inflation fears are affecting Biden’s economic policy approval ratings.
What Happened: El-Erian took to social media platform X to share the findings of the latest FT-Michigan Ross poll. The poll revealed that 80% of voters consider high prices to be one of their most significant financial challenges.
This concern about inflation is impacting Biden’s economic policy approval ratings, with 58% of voters disapproving of his handling of the economy. This disapproval has increased from 55% the previous month.
El-Erian’s post also highlighted other financial concerns among voters. 49% of voters are worried about income levels, up from 45% in the previous poll, and 32% are concerned about housing costs, up from 27% in April.
El-Erian wrote citing the latest FT-Michigan Ross poll, "Joe Biden's re-election prospects are being dogged by persistent fears over #inflation, with 80 per cent of voters saying high prices are one of their biggest financial challenges."
"Aside from anxiety about inflation, the poll also found 49 per cent of voters are concerned about income levels, up from 45 per cent, and just under a third — 32 per cent — are worried about housing costs, compared to 27 per cent in April."
These findings are a reversal of the recent gains Biden had made among voters regarding his handling of the U.S. economy. The poll results, which come less than six months before the presidential election, suggest that voters are still attributing high consumer prices to Biden without acknowledging the strong jobs market and booming economy.
March inflation stood at a 3.5% annual increase, while the Federal Reserve’s benchmark policy rate remains within the 5.25%-5.50% range since July.
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Why It Matters: The findings of the FT-Michigan Ross poll are significant as they indicate a potential shift in public opinion regarding Biden’s economic policies. This shift could have implications for the upcoming presidential election.
El-Erian’s concerns about inflation align with the broader economic landscape. The recent surge in inflation has led to fears of a potential economic downturn. This has prompted the Federal Reserve to consider rate hikes, a move that could impact the stock market. Investment strategist Ed Yardeni has even warned of a potential stock market “melt-up” driven by rate cuts.
Despite these concerns, President Biden remains optimistic about the economy, attributing the persistently high inflation to corporate greed. Meanwhile, Goldman Sachs has pointed to the recent rebound in U.S. immigration levels as a factor that has helped stabilize wages and inflation.
El-Erian has previously warned about the potential impact of the Federal Reserve’s data-dependent approach following the April U.S. jobs report. He suggested that this approach could lead to further disruptions in global markets.
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